I’m a money expert – here’s five tips to make sure your baby is a millionaire by the time they retire

A money expert has revealed five top tips to ensure your baby has a £1million pension pot by the time he retires.

Even though having a baby means your cost of living has increased but your disposable income has decreased, it doesn’t necessarily mean you’re strapped for cash.

Megan Jenkins, a certified financial planner and partner at wealth management firm Saltus, offered advice on supporting children financially.

She outlined how parents can prepare for the costs of university or a deposit for their child’s first home – and how a newborn can retire with a £1million pension pot.

It comes after the viral Project Mbappe meme in which parents vowed to impose tough training sessions on their children in a bid to encourage their meteoric rise to fame and fortune after Kylian Mbappe won the World Cup.

The financial expert said the hardest part is realigning the lifestyle parents once enjoyed and possibly the lower income they have now.

It may mean rethinking spending on new or expensive toys or clothes and opting for second-hand.

She explained: ‘A child can receive a pension from birth – there is no minimum age.

‘Only a parent or guardian can open a pension for a child, but once it is running, anyone can contribute: parents, grandparents, godparents, friends or other relatives.

‘Junior pensions are a great tax-efficient way to build a retirement nest egg for your child, thanks to the power of compound growth.

‘By setting up a pension as early as possible, even small contributions have more time to grow. Even though your child is decades away from retirement, you have helped secure his future financial well-being.

‘The most you can save into a Junior Pension each year from birth to age 18 is £3,600, including up to £720 tax relief, which is paid by the government, and up to £2,880 from family members or individuals.

‘Control of the pension automatically passes to your child at age 18, but the money is blocked until retirement age (usually accessible from 55, but 57 from 2028).

‘However, if you delay access to the money until he is 65, your child could retire with a £1 million pension pot thanks to the power of compounding (five per cent per annum until age 65, would equate to more than £1 million. That’s potentially a return of over 2,000 percent.’

She told new mothers and fathers not to shy away from asking their own parents for financial help – through their pensions.

‘If there are plans for grandparents to leave their assets to their children, they could leave some money to their grandchildren through their pensions, as a way of passing on wealth to the next generation.

‘The appeal of leaving a pension to grandchildren is that, depending on the age at which the grandparents die, and if the grandparents are over 75, this is taxed at the beneficiary’s marginal rate.

‘So if you have a minor child or a university child who is receiving money from a pension, they can access it virtually tax-free because they have their personal allowance of £12,570 a year that they can use and this will enable them to to take it out in phases.’

She gave the example: if a grandchild inherited £50,000 from his grandmother’s pension, this money could be used to fund three years of university, receiving £12,570 a year tax-free.

Ms Jenkins advised parents to set up a Junior ISA, which would allow several family members to contribute.

She said, “You can start using that as a way to help pay for college costs, and if a child decides not to go to college, that’s a head start on the initial property deposit. You can save up to £9,000 each tax year and it’s money that’s tax-free.

‘Family members can contribute as much or as little (depending on a provider’s terms) as they wish to the account and it will undoubtedly be more beneficial than buying a material gift for a child. Instead, you put it aside for the longer term, which they will appreciate when they are eighteen, although that is not so bad now.’

Other useful tips included taking out Family Income Protection or Family Income Allowance, and updating your will.

She said: ‘During the early years, the costs of childcare and raising a child are high and therefore a family income benefit is a valuable insurance policy. The policy provides an additional income if one of the parents dies before your child is 18 years old.

‘Although the initial cost of the policy may seem high, you might want £20,000 a year until you’re 18, you start with £360,000, but if you die after ten years that’s £120,000 instead of £360,000, so the cost are high. cheaper because the insured amount paid out by an insurance company is a lot lower, but corresponds to the maintenance costs of having a child, in case one of the parents were to die.

‘It is also important that your will is up to date, including the accompanying letter of wishes.’

Other parents across Britain are embracing the ironic craze of training their children from an early age to become skilled football talents and hopefully enjoy the same rapid stardom as French great Kylian Mbappé.

The 25-year-old, considered one of the best players of his generation, had already won the World Cup and four Ligue 1 titles by the time he turned 21.

He is expected to leave current club Paris Saint Germain in the summer, with Spanish giants Real Madrid a likely destination.